Banking
Fitch Downgrades Union Bank’s National Rating to ‘BBB-(nga)’
By Dipo Olowookere
The National Long-Term Rating of Union Bank of Nigeria Plc’s BBB(nga) has been downgraded to BBB-(nga) by Fitch Ratings.
In a statement issued by the rating agency, it however, said the lender’s Long-Term Issuer Default Rating (IDR) has been affirmed at ‘B-‘ with stable outlook.
Fitch said the downgrade of Union Bank’s National Long-Term Rating mainly reflects its view of weaker asset quality relative to Nigerian peers’, as highlighted by the bank’s disclosure under IFRS 9.
According to the statement released on Tuesday, the rating company said the IDRs of Union Bank are driven by its standalone creditworthiness, as defined by its Viability Rating (VR).
Union Bank’s VR, as with that of other Nigerian banks, is highly conditioned by Nigeria’s operating environment, with the fragile economic recovery restraining banks’ growth prospects and asset quality, Fitch said.
It added that the financial institution’s VR further reflects a moderate franchise, weak profitability, severe loan-quality problems and adequate capitalisation, funding and liquidity.
However, it noted that the stable outlook reflects Fitch’s base case expectation that Union Bank’s credit profile is unlikely to change significantly over the next one-to-two years.
Union Bank’s operations are concentrated in Nigeria and the lender accounted for 4 percent of banking system assets at end-2017.
Union Bank’s stock of impaired loans is declining, the statement noted, as is its exposure to the troubled oil sector. However, the bank’s impaired loans (stage 3 loans under IFRS 9) ratio (24% at end-1H18) is very high compared with the 9.4% average for rated Nigerian banks, driven primarily by its oil sector exposure, it added. Stage 2 loans measured at a further 30 percent of gross loans at end-1H18. Reserve coverage of impaired loans (32% at end-1H18) is low, reflecting management’s view of collateral on impaired loans, Fitch said.
Furthermore, the rating firm said Union Bank is exposed to large credit concentrations. The 20-largest loans measured at 71 percent of gross loans and 128 percent of Fitch Core Capital (FCC) at end-1H18. The volatile oil sector represented 45 percent of Union Bank’s gross loans at end-1H18.
Union Bank’s operating profit/risk-weighted assets ratio was 1.8 percent in 2017 (compared with rated-banks average of 4 percent), which is weak by emerging market standards.
The bank has a high net interest margin, but this is offset by a high cost-income ratio and large loan impairment charges that have eroded around 55 percent to 65 percent of pre-impairment operating profit in recent years.
Capital metrics are somewhat better than similarly-sized peers’, having improved following a rights issue in 2017, Fitch said. However, as a result of IFRS 9 implementation from this year, Union Bank’s FCC ratio declined to 24 percent at end-1H18 (end-2017: 31 percent), the company added.
Union Bank’s high FCC ratio must be considered in the context of the bank’s large unreserved impaired loans, which measured at 45 percent of FCC at end-1H18.
Union Bank benefits from a strong retail deposit base, which accounted for 52 percent of customer deposits at end-1H18, providing an inexpensive source of stable funding. Single-depositor concentration is in line with peers’, with Union’s 20-largest deposits accounting for 21% of the total at end-1H18. Union Bank’s loans/customer deposits ratio (62 percent at end-1H18) sits at the lower end of the peer group.
Foreign-currency liquidity has been tight in recent years, with Union Bank restructuring some trade finance obligations with international correspondent banks in 2015 and 2016. Foreign-currency liquidity pressures have eased and are no longer a significant rating weakness.
Fitch said it believes that sovereign support to Nigerian banks cannot be relied upon given Nigeria’s weak ability to provide support, particularly in foreign currency. In addition, it said there are no clear messages of support from the authorities regarding their willingness to support the banking system.
“Therefore, the Support Rating (SR) and Support Rating Floor (SRF) are ‘5’ and ‘No Floor’, respectively. This reflects our view that senior creditors cannot rely on receiving full and timely extraordinary support from the Nigerian sovereign if any of the banks become non-viable,” the statement said.
It further noted that Union Bank’s Long-Term IDR is sensitive to a change in the bank’s VR. Downside pressure is most likely to result from a material worsening of impaired loans, including the migration of stage 2 loans into the stage 3 category, putting pressure on capital adequacy. A positive rating action is unlikely in the foreseeable future.
“Union’s National Ratings are sensitive to a change in the bank’s creditworthiness relative to Nigerian peers,” the statement said.
By Adedapo Adesanya
The African Energy Bank (AEB) will now officially launch in September in Abuja after failing to meet its targeted first-half 2026 commencement date, marking a fresh timeline for the continent’s energy financing institution.
The Secretary General of the African Petroleum Producers’ Organisation (APPO), Mr Farid Ghezali, as per Argus Media, acknowledged “several postponements” but said the new deadline is “to make the bank operational in September 2026 in view of the incompressible deadlines from an administrative point of view”.
A planned April start was pushed back to June before APPO members were again mobilised around a third-quarter deadline. At a recent meeting, the Nigerian government reiterated the country’s commitment to the African Energy Bank’s formal commencement of operations.
The bank was established by the APPO and the African Export-Import Bank (Afreximbank) to address the critical financing needs of Africa’s oil, gas and broader energy sectors and mitigate the global funding pressure against hydrocarbon investments in Africa.
The APPO scribe said funding has remained a major challenge even when the Nigerian government said the headquarters of the bank was ready since 2025.
Mr Ghezali called on APPO members to redeem their pledges towards the $500 million start-up capital before the end of June.
Argus quoted sources as saying that 91 per cent of the capital had been raised and that the Nigerian National Petroleum Company (NNPC) Limited and the Nigerian Content Development and Monitoring Board (NCDMB) would make up the balance.
Mr Ghezali said AEB aims to reverse the situation that sees Africa importing more than 60 per cent of its oil products consumption and producing only 12 per cent of global upstream liquids while being home to many of the world’s largest national oil and gas reserves.
He stated that the bank will target the financing of 20–30 LNG, petroleum products pipeline, terminals and refining projects by 2030. Projects that monetise natural gas as a transition fuel will take up 40 per cent of AEB’s loan book, and priority will be given to projects that contribute towards the creation of “500,000 to 1 million direct and indirect jobs in the energy value chain”.
Speaking at a Nigerian energy summit in February, Mr Ghezali said the bank plans to raise $15 billion in its first three years of operations to fund strategic energy projects.
He also unveiled the three-phase road map for the AEB, including “Phase one, which, as I said in the first half of 2026, launches the African Energy Bank platform with 10-pillar projects involving countries such as Nigeria, Angola, and Libya. APPO certification and integration of IOCs such as Shell or ENI.”
“Phase two, in 2027, we plan to start a regional gas-oil trade, integrating the principles of the Bassari Declaration for 15 per cent local content.”
Phase three, reaching 2030, the African Energy Bank will be a true African financial hub, with $200 billion mobilised.”
By Modupe Gbadeyanka
Zenith Bank Plc has joined other global corporations to commemorate the 2026 World Environment Day with a two-phase environmental clean-up initiative in Lagos State.
The financial institution participated in the commemoration under the global theme Inspired by Nature. For Climate. For Our Future through a two-day event.
In the first phase, which was a morning clean-up conducted by staff of the Bank on Wednesday, 3 June 2026, along Ajose Adeogun Street, Victoria Island, Lagos, employees of the lender cleared waste, sensitised residents on proper disposal practices, and reinforced the bank’s culture of community service and environmental stewardship.
The second day, participants engaged in a waterways clean-up at the Falomo Waterways, Ikoyi, Lagos. This was in collaboration with the Lagos Waste Management Authority (LAWMA) and the Lagos State Waterways Authority (LASWA). The joint effort focused on removing marine debris, promoting cleaner waterways, and supporting the state’s broader climate-resilience agenda.
“At Zenith Bank, sustainability is integral to how we operate. Clearing our streets and our waterways is a practical reminder that protecting the environment is a shared responsibility – and one we are proud to take up alongside LAWMA and LASWA.
“Through these exercises, we are taking deliberate action to preserve our communities, support climate action, and inspire others to act. Our operations will continue to align with global environmental standards as we build a more sustainable future for Nigeria and Africa,” the chief executive of Zenith Bank, Ms Adaora Umeoji, stated.
Zenith Bank says it remains committed to embedding Environmental, Social and Governance (ESG) principles across its operations, investing in green initiatives, energy efficiency, and community-focused programmes, in line with its commitment to environmental sustainability and responsible business practices.
These efforts advance the United Nations Sustainable Development Goals – particularly SDG 7 (Affordable and Clean Energy), SDG 11 (Sustainable Cities and Communities) and SDG 13 (Climate Action). Sustainability remains an operational imperative across the Bank’s Nigerian base and its broader African, UK and European footprints.
By Modupe Gbadeyanka
The need to consider the usage of transaction data to design credit products for millions of small businesses in Nigeria has been emphasised by the chief executive of Moniepoint Incorporated, Mr Tosin Eniolorunda.
Speaking at a panel session at the launch of the Nigeria Payments System Vision 2028 (PSV 2028) by the Central Bank of Nigeria (CBN) recently, the Moniepoint chief said transactions from the payments ecosystem could be tracked to unlock economic survival for millions of underserved businesses that have been historically shut out of formal credit markets.
PSV 2028 is a framework aimed at setting priorities and direction for the country’s payments infrastructure over the coming years, with financial inclusion, resilience, and innovation among its core pillars.
According to the CBN governor, Mr Yemi Cardoso, the new framework builds on Nigeria’s progress in digital payments and seeks to accelerate the country’s transition towards a more inclusive, technology-driven ecosystem as it continues to lead Africa’s digital payments ecosystem.
At the panel, Eniolorunda noted that “I believe the next phase of growth will come from layering services like credit onto existing payment flows, using the visibility and trust already built through financial transactions.”
Speaking on the power of payment infrastructure as a foundation for broader financial services, he argued that the data generated by payment systems, when used responsibly, holds the key to making credit faster and more accessible for underserved businesses.
“One of the most powerful things about payment infrastructure is the data it creates. When used responsibly, it can help unlock quicker and more accessible credit for businesses that have historically been underserved. For many small businesses, access has always been the real barrier,” he said.
“Achieving the ambitions of PSV 2028 will require regulators, banks, fintechs, and ecosystem players working together with a shared long-term vision,” Mr Eniolorunda added, echoing Governor Cardoso’s warning against the country’s historic “start-stop” policy cycles.
“Over the past two decades, Nigeria’s payments ecosystem has evolved into one of the most dynamic and innovative in the world. From instant payments and digital adoption to fintech-led innovation, our progress has often set the pace on the continent. While this progress has not always been fully reflected in global narratives, its impact on economic activities, financial inclusion, and system resilience is evident across our economy,” he said.
Business Post learned that the panel was moderated by the chief executive of Sterling Bank, Mr Abubakar Suleiman, and also featured the chief executive of the Nigeria Inter-Bank Settlement System (NIBSS) Plc, Mr Premier Oiwoh; his counterparts at Remita Payment Services Limited (RPSL), Mr Deremi Atanda; and Shared Agent Network Expansion Facilities (SANEF) Limited, Mrs Uche Uzoebo, among others.
-
Feature/OPED6 years agoDavos was Different this year
-
Travel/Tourism10 years ago
Lagos Seals Western Lodge Hotel In Ikorodu
-
Showbiz3 years agoEstranged Lover Releases Videos of Empress Njamah Bathing
-
Banking8 years agoSort Codes of GTBank Branches in Nigeria
-
Economy3 years agoSubsidy Removal: CNG at N130 Per Litre Cheaper Than Petrol—IPMAN
-
Banking3 years agoSort Codes of UBA Branches in Nigeria
-
Banking3 years agoFirst Bank Announces Planned Downtime
-
Sports3 years agoHighest Paid Nigerian Footballer – How Much Do Nigerian Footballers Earn